Not In My Name!

While I hate getting emotional in my posts there is an issue over which I get incredibly inflamed: religion.

 I have never really believed in a God but could only really be said to have considered the subject in depth when I was about 11 or 12. It was only at this age did I realise that there were people in the world who did. I had assumed that it was akin to Santa Claus, everyone being in on the secret. To my dismay however I discovered that religion was not only widespread but also immensely powerful.
Growing up in Catholic Ireland, I received all the sacraments from Baptism to Confirmation (still believing it was a social custom of no real importance), this was mainly due to how it was forced upon us in schools which are predominantly run by the Catholic Church, something I never noticed as a child. When I did turn 11/12 and began to speak out against religion openly (particularly in our religion classes at school) I was a fully-fledged atheist and could take on any of my religion teachers who quickly turned their attention to...less questioning...students.

I never considered myself a Catholic but I never formally left (never bothered). Recently however I had some free time and so decided to go about it and spoke to the priest of the local parish. He said it would he would investigate it. While I have yet to hear back from him I have discovered in the mean time that the Catholic Church no longer accepts formal defections. While I have yet to speak to the priest again (its a busy time of year) this very fact irks me no end.

How dare they count me among their number? Many of my friends ask why I care. Well there is a very good reason as to why I care. The Catholic Church derives its credibility and power from the number of people they claim. When they approach politicians in Ireland and point to the ~87% Catholic population they appear relevant, they appear to be in touch with the people, they appear to be important. It is through these statistics which do not accurately reflect the level of religious belief that they defend the virtual Church monopoly on schooling, that they defend the Church's involvement in the healthcare system.

Well, I say no longer. How dare they hold a politician's ear in my name, how dare they manipulate the health and education system in my name, how dare they systematically rape and abuse entire generations of children in my name. NOT IN MY NAME!

Electron Drift and Murder Rates

     I have met with a lot of criticism for my posts on income inequality and muder rates (e.g. here). The primary criticism is that people are far more complex than my posts might suggest and that it is not abstract notions such as 'income inequality' that determine a person's actions but rather their personal history. As a result I am compelled to respond.

     To do so I begin with an (classical) analogy from physics; the notion of drift velocity. Electrons in a conducting wire tend to'wander' about in random directions at approximately 1570 km/s. This random movement is akin to the complex lives of individuals. Impossible to describe and predict, it accounts for most of the movement of the electrons. Likewise, individual events in our lives account for our characters and habits.
     Now, what occurs when we apply an electric field to our copper wire. The electrons dash off! Well........at a speed of the order of roughly one metre per hour (in the wiki example of 1mm diameter copper wire with a current of 3 amps). Clearly this 'drift velocity' is swamped by the random motion of the electron (illustrated well here). In this case the applied field acts as the 'environment' or 'backdrop' for the charges.
       In a similar vein, income inequality forms the backdrop and environment for members of a society. The slow drift of the electrons is comparable to the increase in murder rates. While it is the individual's life and circumstances that determine whether or not they will murder, certain conditions (be they economic or otherwise) tend to make certain experiences, certain viewpoints, certain actions more likely. So to claim that high levels of income inequality affect the homicide rate is not to make a deterministic statement and the remarks "Oh I grew up in such a neighbourhood and yet I'm not a murderer!' miss the point entirely. It is simply the case that certain conditions make certain results more likely. In any case, I strongly recommend reading some papers about income inequality and homicide rates. (A very nice example can be found here).

The Borders of Absurdity

   The inanity of U.S. politics has never ceased to me amaze me but two incidents as of late leave me somewhat stunned. First we have the crashing of a U.S. spy-drone in Iran. While in itself not hugely exciting, what is interesting is the U.S. response, to ask for the drone back. Only in a completely topsy-turvy world could someone ask for a crashed spy-drone back and yet in mainstream media in the U.S. the outrage is over Iran's refusal to return the drone. Even comedians have lashed out at Iran's intransigence. For me this is a symptom of how nonsensical U.S. discourse has become. Consider the contrary situation, an Iranian spy-drone crashes in the U.S. and the Iranian government asks for it back. What would be the likely response? It would receive howls of laughter from the press, it would serve as yet another example of Iran's disconnect with reality.
   The second example I'll give concerns Newt Gingrich's comments about making poor children work as janitors in order to pay for their education. In any reasonable world this should have resulted in his immediate disqualification for office, the newspapers would read "Child Labour Scandal: Gingrich resigns amid howls of fury" (throw a pun in and you might get closer to today's newspapers). In the mad world that is U.S. politics however this comment had little or no impact on Gingrich's election chances. There has been no real media outcry, there has been no backlash.
   These incidents are by no means isolated but rather are indicative of a trend in U.S. (and to a much lesser extent, World) politics. What facilitates this madness however? The psychology is simple. When one encounters an unfamiliar scenario one tends to take their cue from those around them. This effect is well studied and applies across society whether it involves etiquette in a fancy restaurant or whether or not to give to the homeless man ahead. In the case of novel political events or policies the public tends to be primed by the media and tends to judge the outrageousness of any statement based on the outrage expressed in the media. If the media presents such positions as acceptable then the public at large presumes they must be.
     This feeds in to the increasingly absurd and extreme positions held by many candidates, particularly those in the Republican primaries as of late. Interestingly, none of the candidates that have fallen in popularity have done so due to policy positions. Indeed Perry fell not because he wanted to annihilate the Department of Education (surely an extreme position) but instead he fell in the polls due to not being able to remember which departments he would get rid of. Likewise, Cain and Bachmann lost top spot due to gaffes and scandal rather than (in my view) the insanity of the policy positions which they were actually able to communicate.
    We live in a world where increasingly bizarre positions are glossed over by a press which instead concentrates on gaffes. There is no outrage over the idea of getting rid of the Department of Education, instead the outrage is expressed over a bad memory. With this sleight of hand the position becomes legitimised and there is no real examination of the policy itself. In this fashion any position can be made to seem reasonable and can be presented to the public by focusing on trivial points related to it. In this fashion ideas such as child labour, abolishing the Department of Education and the returning of crashed spy-drones all stow their way into public discourse as reasonable ideas, indeed as non-controversial ideas. What do you think?

Where are the protests?

       With unemployment standing at 14.4% and rising, and with the economy still contracting (GNP down by 2.2% last quarter), why on Earth are the the people of Ireland not taking to the streets like their counterparts in countries like Greece and Spain? While some grumble about the poor weather I am inclined to see emigration as the primary dampener, not the rain. Emigration is rather high in Ireland in comparison to the size of the population and has been rising throughout the recession. Furthermore many of these emigrants are young. January to April this year saw a 45% increase on last year with 33,100 emigrants in the 15-24 age group and 34,400 in the 24-44 age group and only 7,200 who were above 44.
   
        Given that the average instigator of a riot tends to be a newly graduated unemployed male it is unsurprising that the high levels of emigrating have, in effect, prevented large scale protest. Not only does the high level of emigrating reduce the overall unemployment rate (thus leaving those who stay less affected) it also saps the country of the energetic and angry youths who would be on the streets in Spain or Greece, or indeed the Arab world. This high level of emigration seems integral to the Taoiseach Kenny's strategy. Not only does it prevent any major protest against his punitive budget cuts but it also leaves an Ireland with a much older population and given that older people tend to vote for Fine Gael that can't be a bad thing in his eyes.

Oligopolisticexpialidocious or The Case for a Minimum Wage

     Technically the title should read Oligopsonisticexpialidocious but it doesn't quite have the same ring. In any case, what the hell does it mean? Well, an Oligopoly is a market which consists of a small number of large firms (similar to a monopoly which only has one). And an Oligopsony is a market which consists of a small number of powerful buyers (it might be better to read about the similar monopsony).  Now, you're probably asking what it has to do with the minimum wage. It is an interesting relationship which I chose to bring up because of the constant rhetoric about how minimum wages destroy jobs. Now, notwithstanding the fact that the minimum wage has declined in real terms since the 70's, what the hell does the minimum wage have to do
unemployment?
     The argument is rather straightforward. If there is a minimum wage then any worker who produces less value than the minimum wage will be fired as they cost more than they are worth, this will inevitably lead to unemployment (I have simplified it slightly). The argument holds and is the basis of almost all opposition to minimum wages. Indeed one has to ask why anyone supports the minimum wage if it leads to unemployment, well the answer is it doesn't, not necessarily.
     Hang on a sec! You just said it did! Well, let's go back to our previous argument and ask what if people are not being paid an amount equal to the extra value they add (marginal revenue product/MRP)? Under a perfectly competitive system this wouldn't be the case, markets would clear until the wage equal the MRP of the worker. However, do we have a perfectly competitive market? The answer is no, well kinda.

     Under perfect conditions, there is no cost to the worker in changing job and any cut in wage means they will simply move company. It also assumes that workers are indifferent between jobs (clearly not the case). These conditions (among others) result in a measure of market power moving towards the employer.  As a result we see less people employed than in a competitive system and these people are employed at a lower wage than would prevail under competitive conditions. The graph from wiki illustrates this well (but it is somewhat complicated).

     -The axes L and w refer to the quantity of labour employed and the wage paid (respectively).
    -The red line is the marginal revenue product of an extra worker. (i.e. the extra value an additional worker would add to the firm).
   - The blue line is the supply of labour. (i.e. the amount of labour forthcoming at each wage level).
   -The green line is the marginal cost of labour (how much it costs the firm to hire an additional person).

    Now under a perfectly competitive system we expect the firm to produce at level C with wages w' and L' labour employed. At this point the wage of the employee is equal to the MRP (as mentioned above). If however the employer enjoys some monopsonistic (or oligopsonistic) power then this is not the case. Instead the firm does not have to worry about workers being siphoned away by competition and so does not have to raise wages to keep employees. In this case the firm maximises its profits by employing more labour until MC (the extra cost of a worker) is equal to MRP (the extra value of a worker). This occurs at point A and leads to a wage w and employment L. Both w and L are below the equilibrium in the competitive system. i.e. less people and lower wages.

    Now, back to the minimum wage. Under these conditions a minimum wage set between w and w' above not only leads to an increase in wages but also an increase in employment! This is an amazing result and can actually be used to test the prevelance of monopsony in a market. Now, if there does exist monopsony (due to a lack of knowledge, job-search frictions etc.) then there certainly is a case for the minimum wage. As to what it should be set at? That is a difficult question and must rely on emprical observation. The main thing is however, that the minimum does not always lead to unemployment and may in fact increase both employment and wages. For anyone interested in this, I strongly recommend this paper. It is reader-friendly and explains the whole situation far better than I can.

Federal Taxes In Perspective

   There has been an irritating new propaganda trick from the Right in America (pushed by groups such as the Heritage Foundation). Well, I say new but it has been around for a while. It essentially runs as follows: The top 1% pays X% in income taxes, while the bottom 50% pays Y% (with Y<<X). For example:


"Top 1% pay more income tax than bottom 90%!"


"The top 1 percent of tax returns paid 38 percent of all federal income taxes"


"Top 0.1 Percent pays more income tax than bottom 80 percent"

   
    Well....you get the idea. While I do not question the accuracy of these figures (I will take them as true) I will endeavour to put them into context. First off, let's compare what these tax figures are like compared to incomes (right).
    Now, it seems that much of the difference in tax paid is accounted for by income differences but it still seems that the federal income tax is reasonably progressive (not a bad thing). So it would seem the right has a point, however the point is exaggerated due to the fact they don't mention shares of income and that progressive taxes are not necessarily a bad thing.

     You might suspect there is more however (you'd be right). Let's have a look at ALL taxes not just federal income taxes. Other taxes (e.g. sales taxes) tend to be much more regressive (poorer people spend a higher percentage on goods/services), so how do they change the picture. Well, here are the figures:

    

    
     As you can see they paint an interesting picture. The total tax liability of each income groups is roughly identical to their income share with some element of progressiveness. This radically changes the policy implications however. If we were to change the federal tax system (as is suggested by the right) then we may very well end up with a system that is regressive (not a good thing at all). The point to take away from this is (apart from the data manipulation of the right) is the fact that the tax system is not highly 'unfair' to the rich.

For completion I also include the total effective tax rates of income groups (right). For more info I recommend Citizens for Tax Justice and in particular this report which has more up to date figures which show much the same picture.

The Poor and Democracy

   Given the constant tripe espoused by the right-wing in America about the poor voting for benefits. I thought it was time to hit back. What pushed me was this recent article "Registering the Poor to vote is Un-American" which contains a choice quote:

  "Why are left-wing activist groups so keen on 
registering the poor to vote?

Because they know the poor can be counted on

to vote themselves more benefits by electing

redistributionist politicians.  Welfare recipients are

particularly open to demagoguery and bribery."

This essentially sums up the Republican attitude to the poor and democracy. Given that it is a particular talking point and given that it is true that poorer demographics vote for less right-wing candidates (I am loathe to call the Democrats left-wing as, at best, they approach centre), it would make for an interesting investigation to determine whether or not this position is true. Well first off the figures on welfare and its effectiveness in America are telling. It is not, however, what I want to focus on and so I'll just give you the figure above which is a chart showing average monthly welfare benefits in 2006 dollars.

     Instead I want to ask whether or not the poor, by weight of numbers, have a strong influence on policy decisions and despite the nominal notion of democracy the answer would seem to be no. I refer the reader to this paper by Martin Gilens of Princeton University: Inequality and Democratic Reponsiveness in the United States.

Abstract:

"In this paper, I examine the extent to which the link between public preferences and government policy is biased toward the preferences of high-income Americans. Using an original data set of almost 2,000 survey questions on proposed policy changes between 1981 and 2002, I find a moderately strong relationship between what the public wants and what the government does, albeit with a strong bias toward the status quo. But I also find that when Americans with different income levels differ in their policy preferences, actual policy outcomes strongly reflect the preferences of the most affluent but bear little relationship to the preferences of poor or middle income Americans....."


  The graphs alone are most telling of the impact of wealth on democratic power:

     The 10th percentile (those richer than or equal to exactly 10 percent of people) have essentially no influence on democratic decisions whereas the 90th percentile (those richer than or equal to 90 percent of people) can greatly impact policy decisions. Even the 50th percentile (those richer than 50 percent of people) have nowhere near the influence of the top 10 percent. Now that we have tested this empirically (something Republicans loath) the evidence is fairly clear, the idea that the poor have a disproportionate impact on democracy due to weight of numbers is clearly incorrect and instead we see that the idea that big business and the wealthy having an unfair stake in democracy is true.

  Can we expect the Republicans, among others, to drop this notion of 'mob rule' and voting for benefits? Not very likely. It makes for good (if wholly incorrect) politics. The only time the poor have any reasonable say (in proportion to their numbers) is when the issues are of high salience (or the rich agree).

   Unfortunately I don't think that this political sleight of hand and its accompanying red scare elements (highly evident in the American Thinker article) will be leaving American politics anytime soon. Instead, I imagine it will be used as a stick to beat the poor and reduce their power even further, both through technocratic developments and by using this idea of the poor voting for money as a rhetorical device. Time will tell.